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07 Jun 2019

Hung Fook Tong leads smart retailing

Hung Fook Tong leads smart retailing

As artificial intelligences pushes beyond the tech industry, retailers are investing in big data analysis to turn them into actionable insights that can help them make snappy, fact-based decisions to drive efficiency and gain a competitive edge.

Hong Kong-based herbal drink and food provider Hung Fook Tong is among one of these forward-thinking retailers.

The 33-year-old chain, opened its first smart concept shop “Home+” early this year, is harnessing AI to build a personalised shopping experience for its customers, empowered by visual recognition API and self-service electronic payment.

“It’s essential for us to understand our customers more deeply and deliver what they want, and we believe big data is the winning formula,” said Dr. Ricky Szeto Wing-fu, executive director and general manager of Hung Fook Tong.

The listed company is invited on the agenda at this year’s Hong Kong Cloud Expo show, at the Big Data World Theatres. A range of topics from AI application on retail business and the power of big data will be discussed.

The  “Home+” concept shop is a joint effort between Hung Fook Tong and other corporate partners . It is essentially a self-service store which customers can go through their purchases by self-checkout kiosks. Between six to eight “Home+” stores will be opened this year, and the Group aims to actively expand its smart retailing initiatives.

“We plan to roll out more advance retail technologies such as facial recognition payment technology, and work with our corporate partners to deliver even greater shopping enjoyment and synergies at more shops of this nature,” Dr. Szeto said.

VEND LIKE NO OTHER

Hung Fook Tong is the first in the wellness beverage industry to roll out smart vendors that provides 24/7 personalized services. The company’s smart vending machine, namely “HUNG+”  vendor, uses a combination of visual recognition technology and AI to better serve its customers.

The Smart Vendors are equipped with cameras that photograph the customers and analyse their profile such as age and gender with the help of AI. By integrating these data with the location of sales, or even the temperature and humidity at the sales point, the machine will figure out a series of customers’ preferences and provide a recommendation of which products could be most liked.

That has transformed the relationship the retailer has with its customers from the conventional passive model to become more actively engaged, said Dr. Szeto. The management can better acquire insights into consumption pattern and hence respond faster to facilitate decisions on targeted sales and marketing strategies.

“What we gained so far are invaluable insights on consumer behavior at different locations, enabling us to better design our channel strategy,” Dr. Szeto said.

“With AI and big data, we can build a profiled demographic which allows targeted promotion at the point of sales and offer the best-suited products to cater customers’ needs,” Dr Szeto said. The technology can also help to plot purchases trends and manage product mix and inventory.

Hung Fook Tong has a vast customer base in Hong Kong of over 850,000 JIKA CLUB members, these members can conveniently pay with their mobile app and enjoy exclusive e-coupons and discounts at “HUNG+”. The idea of Smart Vendors is particularly appealing to unstable hours office workers who can use the service at any time and the young tech-savvy generation who love to tailor their own shopping experience.

So far about 16 of these Smart Vendors were launched in the past year or so to facilitate more than 7,000 monthly transactions. They are situated across various locations in Hong Kong to complement the company’s 113 physical shops.

SHAREHOLDERS RETURNS

Hung Fook Tong engaged with Tech Data and IBM, spearheaded by the company’s retail operation and business development team, to develop the intelligence kiosks only in three-month time and the commercial returns are observable with stable growth in sales.

In the 2018 financial year, the group recorded a year-on year increase of 4.8% in gross profit to HK$476.3m due to robust sales performance in Hong Kong retail business. Despite furious competition in the industry, the group remains standing as the largest herbal retailer in Hong Kong based on retail network size.

It is also crowned as the best recognisable brand in the wellness drink sector for 16 continuous years based on sales value and volume, according to Nielsen.

Not only does AI and big data seem to lead to a road to stronger business, the application of tech is believed to help the company to sail through challenges posed by labour shortage, rising wages and rents, according to Dr. Szeto. “The group can benefit from greater economies of scale and cost reduction,” he said.

With greater governmental support and customers’ engagements, Dr. Szeto believes AI should be widely accepted by local buyers just like how they are used to new tech like mobile app and electronic payments. “We look forward to greater government involvement and industry support to further develop this innovative retail technology in the near future,” he said.

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